Best Loans for Bad Credit of July 2024

Compare the top loans for bad credit

These bad-credit loans were selected based on our analysis of more than a dozen lenders.

On this page

• What are bad credit loans?

• Pros and cons of personal loans for bad credit

• How to compare loans for bad credit

• Bad credit loan rates and fees

• How to get a personal loan with bad credit

• Where to get a personal loan for bad credit

• Types of bad credit loans

• Alternatives to personal loans for bad credit

• Frequently asked questions

What are bad credit loans?

A bad credit personal loan is for borrowers with low credit scores (from about 550 to 660) or thin credit histories. Bad credit loan amounts range from about $1,000 to $50,000 and annual percentage rates are capped at 36%.

Like all personal loans, bad credit loans have fixed rates and are repaid in fixed monthly installments over a period of one to seven years. These loans typically aren’t backed by collateral — they're unsecured.

Though you may qualify for a personal loan with bad credit, your rate will likely be on the high end of a lender’s range, and your approved loan amount may be smaller than what you request.

» LEARN MORE: What credit score do you need to get a personal loan?

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Pros and cons of personal loans for bad credit

Pros

• Fast funding. Some lenders can approve a loan application instantly, while others may take a day or two. Once approved, funding can happen the same day or take a couple of days.

• Fixed, predictable payments. Unlike most credit cards and credit lines, personal loans usually have fixed interest rates, meaning you’ll have the same monthly payment for the full loan term.

• On-time loan payments build credit. Payment history is the biggest factor that determines your credit score, and on time payments toward a personal loan can give you a big boost.

• Rates may be lower than credit cards and other high-interest loans. Though a low credit score often results in a high personal loan rate, your rate may still be lower on a personal loan than some credit cards and other high-interest loans.

Cons

• Rates are often high. Bad-credit borrowers can expect an annual percentage rate on the high end of a lender’s range. Personal loan rates max out at 36%, and it‘s possible someone with a low score could get a 20% APR or higher.

• Consumers with the lowest credit scores may not qualify. Minimum credit scores among bad-credit lenders are often between 550 and 660. A score that meets the minimum requirement doesn’t guarantee approval, and those with scores below the requirement are unlikely to qualify.

• Collateral or a co-signer may be required. If you fail to qualify for a personal loan, the lender may suggest you add a co-signer or get a secured loan. These options may help you qualify, but late payments will risk your collateral or co-signer’s credit.

• Predatory lenders may seek out bad-credit borrowers. Predatory lenders — those that use deceptive practices to provide potentially harmful loans — may seek out consumers with low credit scores who fear they won’t qualify elsewhere.

» MORE: How to spot a personal loan scam

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How to compare loans for bad credit

Qualification requirements and cost are the most important features to consider when choosing a personal loan for bad credit. Here are some tips to compare personal loans for bad credit.

Borrowing requirements. Bad-credit lenders consider many factors on a loan application, including:

• Credit score: If a lender has a minimum credit score requirement, you’ll need at least that score, but ideally a higher one, to qualify.

• Debt-to-income ratio: This is the percentage of your monthly income that goes to debt payments. Lenders typically like to see that you can cover your monthly bills, including any other loan or credit card payments, and have money left over after your new personal loan payment.

• Co-applicant and collateral: If the lender offers a co-signed or secured loan, the person or item you add to the application becomes a factor in deciding whether you qualify.

» MORE: Personal loan borrowing requirements

Annual percentage rate range. Consumers who qualify with bad credit are likely to get a rate near the top of a lender’s range, so it’s a good idea to pay attention to that number. A loan’s APR consists of the interest rate plus any fees. Many bad-credit online lenders charge an origination fee. The highest APR an affordable bad credit loan should have is 36%, according to most consumer advocates.

Legitimacy. Read online reviews from other borrowers, verify the lender’s state license and physical address to ensure the lender is providing fair, legal loans.

Monthly payments. Review your budget to determine what you can afford to pay toward a personal loan each month. That way, you can rule out lenders that only offer higher monthly payments.

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Bad credit loan interest rates and fees

Current rates

The average pre-qualified personal loan rate for a bad-credit borrower was 22.69% in May 2024, according to aggregate, anonymized data from NerdWallet.

Common fees

One of the most common bad credit loan fees is an origination fee, which is 1% to 10% of the loan amount. The fee is included in your APR, but a lender may take it before sending you the funds, effectively reducing your loan amount, or add it to your monthly payment.

A two-year, $10,000 loan with a 20% interest rate and a 5% origination fee has an APR of 25.14%. If the lender takes the origination fee before sending you the loan, you’d receive $9,500 and the lender would keep $500.

Lenders also usually charge late payment and non-sufficient funds fees.

Calculate personal loan payments

Use this personal loan calculator to determine your monthly personal loan payment, based on the loan amount, rate and repayment term you enter. Refer to the data above if you aren’t sure what APR you’d get, and add an origination fee to see how it affects loan payments.

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How to get a personal loan for bad credit

Here are the steps to get a bad credit personal loan:

1. Check your credit

Review your credit reports from the three major credit bureaus to ensure the information is accurate and up to date. Fixing errors on your report before applying may improve your chances of qualifying. You can get your credit reports for free on NerdWallet or at AnnualCreditReport.com.

2. Review your budget

Check your monthly income and expenses to see what you can comfortably afford to pay toward a personal loan each month. A missed loan payment will damage your credit score, so take this chance to determine how much you can commit to paying.

3. Pre-qualify with multiple lenders

Many lenders let you pre-qualify online to preview potential loan offers. You provide some information about yourself, like your income, desired loan amount and loan purpose, and the lender does a soft credit pull to determine your potential loan rate, amount, repayment term and monthly payment. No two lenders have the same borrowing requirements, so it pays to pre-qualify with multiple lenders.

4. Submit an application

Once you’ve found the right lender, gather documents, including proof of income and employment, a government-issued ID and bank statements. Most lenders have online personal loan applications, but your local bank or credit union may require an in-person application. The lender will do a hard credit check when you apply, causing your score to temporarily drop. Expect a decision within a few days.

5. Add the new loan payment to your budget

On-time loan payments can build your credit. Add loan payments to your monthly budget and set up autopay to avoid missing any.

» MORE: How to manage personal loan payments

Other tips to qualify for a bad credit loan

Include all your income. Many lenders accept income from employment, alimony, retirement, child support and social security payments. Showing a lender that you have enough income to make the payments is crucial to approval, so be sure to include all sources of income when you apply.

Don’t ask for more than you need. Asking for a smaller loan won’t guarantee approval, but the larger your requested loan, the riskier it may look to a lender. Requesting a loan amount you can comfortably repay goes a long way with a lender.

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Where to get a personal loan for bad credit

Online: Some online lenders offer personal loans specifically for bad-credit borrowers. These lenders may consider information beyond your credit and income to qualify you, though those are still major factors in a loan decision.

Credit unions: Credit unions rely more on traditional information like credit and income but may also consider your history as a member. A member in good standing with the credit union may qualify for a personal loan despite a low credit score.

» MORE: Credit union loans offer low rates, flexible terms

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Types of bad credit loans

• Unsecured personal loan

  An unsecured loan doesn’t require collateral. Instead, a lender determines whether you qualify based on factors like your credit score, income and cash flow.

  When to use an unsecured loan:

  • To make large purchases, debt consolidation and home improvement projects.

  • If you get a low rate.

• Secured personal loan

  A secured loan requires you to pledge collateral — usually a vehicle or bank account — to borrow money.

  When to use a secured loan:

  • The rate is lower than with an unsecured loan.

  • Pledging collateral is worth the risk.

• Co-signed personal loan

  A co-signed loan requires someone to vouch for your ability to repay the loan.

  When to use a co-signed loan:

  • The rate is lower than without the co-signer.

  • The co-signer understands the risk.

• Joint personal loan

  A joint loan is one you get with another person, meaning they share responsibility for payments and can access the funds.

  When to use a joint loan:

  • You get a lower rate than without a co-borrower.

  • You and the co-borrower need equal access to the funds.

• Home equity financing for bad credit

  Home equity loans and credit lines allow you to borrow money against the equity in your home. Home equity loans are fixed-rate, lump sum loans while HELOCs usually have variable rates and allow you to draw on the funds as you need them. Because they’re secured by your home, you risk losing your house if you default.

  When to use a HELOC or home equity loan:

  • For home improvement projects and repairs.

  • You have enough equity to borrow against.

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Alternatives to personal loans for bad credit

A personal loan may not be the right option if you have bad credit. Even if you’re approved, you’ll likely pay a high APR. Consider these alternatives before borrowing.

Family loan

Borrow from a trusted friend or family member. It may help to have a plan for interest, repayment terms and payment frequency in mind when you ask for the loan. Then you and the lender can formalize the details in a family loan agreement.

Payment plans for bills

If you’re struggling to cover rent, utilities or credit card payments, consider asking for an extension or getting on a hardship program. Your credit card issuer, mortgage lender or utility company’s website may have an online application for hardship assistance, but you may have to ask a landlord directly.

Local financial assistance programs

For help meeting basic needs, consider a local food pantry, religious organization or nonprofit. Some organizations can provide food, clothing or bus tickets. NerdWallet’s database of local financial assistance programs lists resources in each state.

Medical bill assistance

Medical bill negotiators, medical credit cards or a payment plan with your provider may help take some of the stress and urgency out of paying a steep medical bill. These options may come with fees or interest, so compare medical bill payment options to find the most affordable one.

Buy now, pay later loan

“Buy now, pay later” is an at-checkout financing option that lets you split a purchase into smaller installments. It’s typically best for necessary purchases that will otherwise stretch your budget and if you have a plan to make the payments on time.

Cash advance app

A cash advance app gives you an advance up to a few hundred dollars and withdraws repayment — plus any tips and fees — on your next payday. These apps can help bridge a temporary income gap, but be sure you can cover regular expenses when the advance is taken from your next paycheck to avoid falling into a debt cycle.

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Frequently asked questions

• What is the best loan company for bad credit?

  Our picks for the best personal loans for bad credit are from these loan companies:

  • Upgrade: Best overall bad credit loan.

  • Upstart: Best for thin credit.

  • Universal Credit: Best for credit-building tools.

  • Avant: Best for fast funding.

  • Best Egg: Best for secured loans.

  • LendingPoint: Best for an easy application process.

  • OneMain: Best for low credit scores.

• What is the easiest way to get a loan with bad credit?

  First, build your credit by fixing errors or catching up on late payments. Consider adding a co-signer with good credit, or securing your loan. It's always a good idea to pre-qualify to check the rate and loan amount you might get. Pre-qualifying does not affect your credit score. Learn all the steps to get a personal loan with bad credit.

• How can I borrow money quickly with bad credit?

  A bad credit score may not prevent you from getting a loan. Lenders like those listed here provide personal loans for borrowers with bad credit, however, you may not qualify if your score is below 500. In that case, alternatives to bad credit loans include family loans, payment plans with medical and utility providers, local financial assistance programs, cash advance apps and buy now, pay later plans.

• Can I get a loan with no credit check?

  Yes, but it may be risky. A no-credit-check lender provides a loan without reviewing your credit history. Instead, these lenders consider information like your bank account transactions, income and employment status. Because these lenders don’t conduct a credit check, making loans is riskier for them and they make up for that risk by charging sky-high interest rates.

  All of the lenders listed on this page check credit.

• How much can I borrow with bad credit?

  Bad credit loans are generally from $1,000 to $50,000. Your loan amount depends on your credit, income, outstanding debts, the lender you choose and the type of loan you get.